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Isn't oil trading fun?
Just this morning I was able to tweet out a trade idea from early morning Member Chat at 4:47 to remind our followers that oil Futures (/CL) were a nice short idea at the $93 mark. Less than two hours later, at 7:26, we decided to take the money and run at $92.15 - which was good for an $850 per contract gain - enough to buy about 300 Egg McMuffins.
We were long on oil Tuesday Morning at $92 and our target for shorting was $93 but, as I said in the morning post: "hopefully, they'll go a little higher than that and we can add short positions using SCO or USO in Member Chat as things can turn very ugly next week as the thieves try to wriggle out of the contracts they signed today." We got a $1,000 upside trade followed by the $1,000 per contract drop from $93.47 (right on schedule, after inventories) back to just below $92.50 and then we got a run back to $93 again on Wednesday ($500 per contract profit), where I again laid out our reasons for shorting them again at $93, which was good for another $1,000 per contract gain and then this morning's $850, which was good for $4,350 PER CONTRACT's worth of gains in just two days.
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Now, I'm not telling you this to point out how great I am at calling Futures trades - I'm telling you this to point out what a MASSIVE SCAM energy trading is and how something should be done to stop this farce, which is ROBBING the world's citizens of over $850Bn a year.
I often say to our members: "We don't care IF a market is fixed as long as we can understand HOW it is fixed and place our bets accordingly," but that's not really true with oil trading, as this criminal enterprise (which I have written about for years) is more harmful to our everyday life than every hurricane, earthquake or terrorist act that has ever been committed on this planet - and they do it to us EVERY DAY OF EVERY YEAR!
I'm not able to go 5 for 5 on oil calls in two days because it's "fair" (and it's not a fluke, we do this all the time), I can do this because it's very, very UNFAIR and I just so happen to understand the criminal network that trades oil well enough to be able to tell you what they are going to do - much as any good cop can tell you what the local drug dealers are doing on a Saturday night.
I had hoped things would be different under Obama but, rather than trying to reign in the speculation that Bush unleashed back in 2001, he's inviting Rex Tillerson (CEO of Exxon Mobil (XOM)) and Jamie Dimon over to the White House to ask for their advice.
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Don't just take my word for it, listen to Dave Dayen, who wrote "Out of Control - New Report Exposes JPMorgan Chase as Mostly a Criminal Enterprise" in which he notes:
As an excellent preview for the Friday fireworks, I urge you to read an astonishing new report, which I've embedded below, from analyst Josh Rosner of Graham-Fisher and Co. The best way to describe the report, "JPM - Out of Control," is that it reads like a rap sheet. Notably, Rosner takes mortgage abuses almost entirely out of the equation, and yet still manages to fill a 45-page report with documented case after documented case of serious fraud and abuse, most of which JPM has already admitted to (at least in the sense of reaching a settlement; given out captured regulatory structure the end result is invariably a settlement with the "neither admit nor deny wrongdoing" boilerplate appended). Rosner writes, "we could not find another 'systemically important' domestic bank that has recently been subject to as many public, non-mortgage related, regulatory actions or consent orders."
The sheer litany of illegal activities just overwhelms you. And these are only the ones where the company has entered into settlements or been sanctioned; it doesn't even include ongoing investigations into things like Libor, illegally concealing inclusions of mortgage-backed securities in employer funds (another ERISA violation), the Fail Whale trades, and especially putback suits for mortgages, where a recent ruling by Judge Jed Rakoff has seriously increased exposure. While the risks are still very much alive and will continue to weigh on the firm, ultimately shareholders will pay, certainly not executives as long as the no-prosecutions standard holds.
The report is an amazing read, stunning in its scope - and that's JUST JPM and they are just one of the many manipulators that have their hands in the energy market, as well as other commodity markets and, of course, the biggest scam of all - the Stock Market, which its primary function is to transfer money from the bottom 90% to the top 1% while keeping the rest of the top 10% distracted enough to not notice they are getting screwed too.
In "The Looting of America," Les Leopold does a good job of pulling back the curtain on what caused the recent financial crisis and, as America (the victim) finally begins to get back on its feet after that last mugging - already the crooks are circling again and we're looking to repeat all the same mistakes we made that let the Banks crash the economy in the first place (third place, actually as we already had the Great Depression and Bush the 1st's S&L crisis before Bush the 2nd showed Daddy how to REALLY wreck an economy good and proper).
There's a reason that we teach our Members how to "Be the Bank" - this game is rigged so that the bankers almost always win (unless, like BSC, they are beaten by other bankers) and options trading allows us to step over to the other side of the table and take the suckers' bets - just like your broker does to you and, just like your broker - we collect our fees and we don't really give a damn whether you win or lose - as long as we collect our vig.
Unfortunately, we still have to pay our own fees up to our own brokers, but it's better to be the middle men than to be the suckers pouring into the Wall Street casino every day with dreams of making 100%. Much easier to make 0.5% a day in fees and KNOWING you can make 100% a year, right?
Additional disclosure: Positions as indicated but subject to change (fairly even mix of long and short positions - see previous posts for other trade ideas). Commodity positions are very short-term and not tradeable by the time you read this.
